Adelaide Concrete Cutting & Drilling Pty Ltd v Marino (No 2) [2024] NSWSC 499

Supreme Court New South Wales

Medium Neutral Citation: Adelaide Concrete Cutting & Drilling Pty Ltd v Marino (No 2) [2024] NSWSC 499 Hearing dates: 8-11 August, 23-25 October 2023 Date of orders: 03 May 2024 Decision date: 03 May 2024 Jurisdiction: Equity Before: Meek J Decision: Findings in favour of plaintiffs against first defendant on contractual claim. Findings against the plaintiffs' claims against second defendant. Parties to bring in short minutes of order. Catchwords: COMMERCIAL — Investment arrangements — D1, a licensed real estate agent, and D2, a solicitor trading as Oracle Law, secured office premises in Queensland and worked from separate parts of the premises — D1 assisted D2 to set up office, referred conveyancing matters to Oracle Law, was given title "business development manager" and used an Oracle Law email address — D1 met P1's director and stated he was a lawyer — D1 assisted P1 with loan arrangements regarding two associates of P1 — D1 and D2 subsequently left office premises and parted ways — D1 sought from D2 and was permitted to retain use of Oracle Law email address — P1's director introduced P2 to D1 — D1 presented investment proposals to plaintiffs — P1 paid $10,000 and P2 paid $200,000 to D1 to be invested by him via a trading platform under asset management agreements ("AMAs") and funds were not repaid — Plaintiffs claim that D1 represented to them that he was a lawyer, that the investments were risk-free or virtually risk-free, would give 100% return after 90 days, and were government controlled ("representations") — Plaintiffs seek to recover against D1 based on contract, guarantee, breach of fiduciary duties or misrepresentation, pursuant to s 1041I(1) of the Corporations Act 2001 (Cth) ("Corporations Act") and s 236 of the Australian Consumer Law ("ACL") and for negligence — Plaintiffs allege that D1 was an employee or officeholder of Oracle Law and seek to recover against D2 under the compensatory limb of the Court's inherent supervisory jurisdiction, and by negligence, with alternative claims based on vicarious liability and breaches of the ACL — D2 cross-claims against D1 for contribution or indemnity EVIDENCE — Privilege against self-incrimination — There is a distinction between the prohibition against drawing an adverse inference from a claim of privilege and adverse inferences that may arise from the absence of evidence which a party or witness could be expected to give (Jones v Dunkel) — It is not permissible to draw an adverse inference from a witness' exercise of his or her privilege against self-incrimination CONTRACT — Construction — Issues regarding aspects of AMAs that bear upon repayment — Whether trade period had commenced — "official start date" an undefined term but no real dispute that the 90-day period had commenced — Whether "return" refers to the initial investment or also the profit on the initial investment — Properly construed, "return" only refers to the profit component, accordingly, there was an unqualified obligation under the AMAs to pay back the initial invested capital after 90 days — Judgment in favour of plaintiffs against D1 — Unnecessary to address guarantee claim EQUITY — Fiduciary duties — Duties allegedly owed by D1 as asset manager said to arise from contractual terms, being duties to disclose matters, to communicate information to the plaintiffs and to commence proceedings to recover invested funds — Fiduciary duties are proscriptive in nature, not prescriptive — Plaintiff failed to elaborate claim regarding fiduciary duties or address alleged breach — Contractual claim succeeded so unnecessary to make findings, particularly in absence of submissions addressing whether proscriptive duties may take on a positive character in relation to alleged duties EQUITY — Rescission — Claims that D1's representations were made knowing them to be false or recklessly as to their truth upheld — Finding that D1's misrepresentations contributed to plaintiffs entering into AMAs, but no indication that the plaintiffs had purported to rescind the AMAs prior to them filing their claims — Plaintiffs either affirmed, or at least made no election to rescind, the AMAs — Court declines to make any declaration as to rescission FINANCIAL SERVICES — Chapter 7 provisions of the Corporations Act are plausibly of some application to the present case — However, no submissions were made regarding claims for breach of the financial services provisions of the Corporations Act against D1 — Given findings in relation to the plaintiffs' contractual claim and misrepresentation claim, the Court declines to make any findings as to this alternative claim CONSUMER LAW — Misleading or deceptive conduct — Plaintiffs failed to distinguish between the operation of the ACL as a law of the Commonwealth and as a State "application" law — The Court proceeds on the basis that the claim is under the ACL as a law of the Commonwealth — Finding that alternative claim against D1 under ACL succeeds but damages no different — Claims against D2 fail NEGLIGENCE — D1 owed a duty of care arising out of the AMAs — Finding that alternative claim against D1 succeeds but damages no different to contractual damages NEGLIGENCE — Alleged duty of care owed by solicitor, D2, to the plaintiffs, who were not established to be the solicitor's clients, and who suffered economic loss — Cases outside recognised or well-established cases of duty of care require focus upon and articulation of the scope and content of the duty of care — Failure of plaintiff to identify the scope and content of the duty of care of a solicitor in absence of any retainer — Duty of care not established LEGAL PRACTITIONERS — Meaning of "client" discussed — Principles regarding implied retainers and general retainers LEGAL PRACTITIONERS — Claim made against D2 under the compensatory limb of the Court's inherent supervisory jurisdiction — Distinction between cases involving intentional conduct by a solicitor (such as breach of an undertaking, or egregious conduct, such as gross overcharging) and cases involving non-intentional conduct that falls short of a particular standard of care — Compensation under supervisory jurisdiction for breach of professional duty by negligence requires something more than "mere" negligence, the negligence must be of a "culpable quality" amounting to a "serious dereliction of duty" — Failure of plaintiffs to address requirements of "culpable quality" or gross negligence — Claim not established PARTNERSHIP — Indicia of partnership discussed VICARIOUS LIABILITY — Proper approach to determining employment relationship — Whether D1 in an employment relationship with D2 requires focus on the characterisation of their respective rights — Finding that there was no contract between D1 and D2 — Relationship between D1 and D2 was not one of employment — Whether tortious acts and omissions of D1 were committed in the course or scope of employment — Whether employment relationship terminated — Held tortious acts occurred after employment relationship, assuming one existed, terminated — In any case, acts were not in the course and scope of the employment and had no connection with what D1 would have been employed to do CIVIL PROCEDURE — Agreed list of issues — Discussion of obligation of parties in conferring with each other and framing lists of issues — Failure of plaintiffs to identify essential aspects of causes of action in the pleadings — Inadequate listing and framing of issues by parties and, in any event, submissions not made by express reference to issues — Pleading and issue listing inadequacies places the Court in an invidious position in addressing the claims CIVIL PROCEDURE — Court Book — Court Book did not heed the pre-trial directions for the email chains to be disassembled and placed in chronological sequence and for the Court Book not to contain duplicates of the same document — Numerous copies of certain emails and other documents scattered through the Court Book and email chains often in reverse chronological order — Non-compliant Court Book inhibited the efficient and smooth running of the hearing and did not facilitate the Court's consideration of the evidence and the issues, or the preparation of reasons for judgment COSTS — Preliminary observations regarding costs of the proceedings when contractual claims propounded by P1 of $10,000 and P2 of $200,000 against D1 straightforward — Balance of claims against D1 and claims against D2 more complicated, and some failed to identify essential issues of claims — Court Book contained 2,745 pages of materials (many duplicated) and hearing extended to 7 days (3 days beyond original estimate) — Presentation of Court Book not conducive to just, quick and cheap disposition of real issues — Parties directed to address proportionality provisions of s 60 of the Civil Procedure Act 2005 (NSW) in addressing issues of costs Legislation Cited: Bankruptcy Act 1966 (Cth) Civil Liability Act 2002 (NSW) Civil Procedure Act 2005 (NSW) Competition and Consumer Act 2010 (Cth) Corporations Act 2001 (Cth) Evidence Act 1977 (Qld) Evidence Act 1995 (NSW) Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW) Legal Profession Act 2007 (Qld) Legal Profession Uniform Law 2014 (NSW) Partnership Act 1891 (Qld) Partnership Act 1892 (NSW) Australian Solicitors Conduct Rules Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: 5 Boroughs NY Pty Ltd v State of Victoria; Roberts v State of Victoria [2021] VSC 785 ACE Insurance Ltd v Trifunovski (2011) 200 FCR 532; [2011] FCA 1204 Adamson v Queensland Law Society Incorporated [1990] 1 Qd R 498 Adelaide Concrete Cutting & Drilling Pty Ltd v Marino [2021] NSWSC 1034 Al Mousawy v Howitt-Stevens Constructions Pty Ltd [2010] NSWSC 122 Allianz Australia Insurance Ltd v Haddad [2015] NSWCA 186 Amaca Pty Ltd (under NSW External Administration) v A B & P Constructions Pty Ltd [2007] NSWCA 220 Articulate Restorations & Development Pty Ltd v Crawford (1994) 57 IR 371 Associated Securities Ltd v Aziz [1974] VR 699 Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424; [1954] HCA 20 Barclays Bank v Various Claimants [2020] AC 973 Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1; [1999] NSWCA 408 Bell v Hartnett Lawyers (No 2) [2021] NSWSC 1270 Bell v Hartnett Lawyers (No 3) [2022] NSWSC 1204 Bird v DP (A Pseudonym) (2023) 69 VR 408; [2023] VSCA 66 Braham v Catalano [2013] VSC 437 Breen v Williams (1996) 186 CLR 71; [1996] HCA 57 Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 (2014) 254 CLR 185; [2014] HCA 36 Brus v Australian Capital Territory [2007] ACTSC 83 Bugge v Brown (1919) 26 CLR 110; [1919] HCA 5 Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" (1976) 136 CLR 529; [1976] HCA 65 Caltex Refineries (Qld) Pty Ltd v Stavar (2009) 75 NSWLR 649; [2009] NSWCA 258 Campbell v Tran [2024] NSWSC 204 Care A2 Plus Pty Ltd v Pichardo [2024] NSWCA 35 Carmody v Priestley & Morris Perth Pty Ltd (2005) 30 WAR 318; [2005] WASC 120 CCIG Investments Pty Ltd v Schokman [2023] HCA 21; (2023) 410 ALR 479 Chong v CC Containers Pty Ltd (2015) 49 VR 402; [2015] VSCA 137 Collins v Insurance Australia Ltd (2022) 109 NSWLR 240; [2022] NSWCA 135 Connelly v Wells (1994) 55 IR 73 Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd (2022) 275 CLR 165; [2022] HCA 1 Cornall v Nagle [1995] 2 VR 188 Council of the NSW Bar Association v Siggins [2021] NSWCA 40 Cox v Ministry of Justice [2016] AC 660 D Capital 2 Pty Ltd v Western [2022] NSWSC 1064; (2022) 20 BPR 42,919 Dale v Veda Advantage Information Services and Solutions Ltd (2009) 176 FCR 456; [2009] FCA 305 Day v Ocean Beach Hotel Shellharbour Pty Ltd (2013) 85 NSWLR 335; [2013] NSWCA 250 Dean v Allin & Watts (a firm) [2001] EWCA Civ 758 Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 Drake & Jackson v Corporation of Victoria (1884) 1 BCR 165 EFEX Group Pty Ltd v Bennett [2024] FCAFC 35 Elite Realty Development Pty Ltd v Sadek [2022] NSWSC 1333 Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95; [2002] HCA 8 Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd (2015) 228 FCR 346; [2015] FCAFC 37 Federal Commissioner of Taxation v Barrett (1973) 129 CLR 395; [1973] HCA 49 Geraghty v Permanent Trustee Co Ltd (1986) 4 NSWLR 412 Girotto v Phillips Fox (a firm) [2011] VSC 293 Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540; [2002] HCA 54 Hardware Services Pty Ltd v Primac Association Ltd [1988] 1 Qd R 393 Hartnett t/as Hartnett Lawyers v Bell as Executor of the Estate of the late Mabel Dawn Deakin-Bell [2023] NSWCA 244 Henville v Walker (2001) 206 CLR 459; [2001] HCA 52 Hill v Dunn [2019] NSWSC 419 Hill v Van Erp (1997) 188 CLR 159; [1997] HCA 9 Hoffmann v Boland [2013] NSWCA 158 Hollis v Vabu Pty Ltd (2001) 207 CLR 21; [2001] HCA 44 Howard Smith & Patrick Travel Pty Ltd v Comcare [2014] NSWCA 215 Imbree v McNeilly; McNeilly v Imbree (2008) 236 CLR 510; [2008] HCA 40 Jeandin v Tzovaras [2011] NSWSC 1254 John Ljubomir Atanaskovic and the persons named in Schedule A t/as Atanaskovic Hartnell v Birketu Pty Ltd – Supervisory Jurisdiction [2020] NSWSC 573 Koehler v Cerebos (Australia) Ltd (2005) 222 CLR 44; [2005] HCA 15 Krolczyk v Winner t/as J Winner Building Services [2022] NSWCA 196 Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11 Legal Services Commissioner v Raghoobar [2023] QSC 41 Magjarraj v Asteron Life Ltd [2009] NSWSC 1433 Mallonland Pty Ltd v Advanta Seeds Pty Ltd [2023] HCATrans 138 Mallonland Pty Ltd v Advanta Seeds Pty Ltd [2023] QCA 24 McDonald v Grech; Bank of Western Australia Ltd v McDonald [2012] NSWSC 717 McIlraith v Ilkin [2007] NSWSC 911 McIlraith v Ilkin [2008] NSWCA 11 Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp [1979] Ch 384 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357; [2010] HCA 31 Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254; [2000] HCA 61 Mohareb v Kelso [2017] NSWCA 98 Mt Owen Pty Ltd v Parkes [2023] NSWCA 77 Myers v Elman [1940] AC 282 Narich Pty Ltd v Commissioner of Pay-roll Tax (1983) 2 NSWLR 597 New South Wales v Lepore (2003) 212 CLR 511; [2003] HCA 4 NSW Trustee & Guardian as Executor of the Will of Michael Robert Walsh (Deceased) v Gregory [2012] NSWSC 681; (2012) 18 BPR 35,153 O'Connor v Comensoli [2022] VSC 313 Oakley Thompson & Co v Kanik (1998) 145 FLR 438 On Call Interpreters & Translators Agency Pty Ltd v Commissioner of Taxation (No 3) (2011) 214 FCR 82; [2011] FCA 366 Pappas v New World Oil Developments Pty Ltd (1993) 43 FCR 594 Parrella v Trustee of the Property of Marino (Bankrupt) [2022] FCA 1530 Perera v Genworth Financial Mortgage Insurance Pty Ltd (2017) 94 NSWLR 83; [2017] NSWCA 19 Perre v Apand Pty Ltd (1999) 198 CLR 180; [1999] HCA 36 Prince Alfred College v ADC (2016) 258 CLR 134; [2016] HCA 37 Purkiss v Hannigan (Court of Appeal (NSW), 13 February 1997, unrep) Rafferty v Madgwicks (2012) 203 FCR 1; [2012] FCAFC 37 Raghoobar v Legal Services Commissioner [2023] QCA 191 Re Application for Admission as a Legal Practitioner (2004) 90 SASR 551; [2004] SASC 426 Resilient Investment Group Pty Ltd v Barnet and Hodgkinson as liquidators of Spitfire Corporation Limited (in liq) (2023) 111 NSWLR 446; [2023] NSWCA 118 Roads and Traffic Authority of NSW v Dederer (2007) 234 CLR 330; [2007] HCA 42 Roy Morgan Research Pty Ltd v Federal Commissioner of Taxation (2010) 184 FCR 448; [2010] FCAFC 52 Scott v Davis (2000) 204 CLR 333; [2000] HCA 52 Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16; [1986] HCA 1 Sullivan v Moody (2001) 207 CLR 562; [2001] HCA 59 Sutherland Shire Council v Heyman (1985) 157 CLR 424; [1985] HCA 41 Sweeney v Boylan Nominees Pty Ltd (2006) 226 CLR 161; [2006] HCA 19 Swick Nominees Pty Ltd v Leroi International Inc (No 2) (2015) 48 WAR 376; [2015] WASCA 35 TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia (2013) 251 CLR 533; [2013] HCA 5 Vairy v Wyong Shire Council (2005) 223 CLR 422; [2005] HCA 62 Victorian Legal Services Board v Jensen [2018] VSC 740 Walters v Scarborough [2011] NSWSC 1380 Wardley Australia Ltd v Western Australia (1992) 175 CLR 514; [1992] HCA 55 White v Jones [1995] 2 AC 207 Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515; [2004] HCA 16 Zervas v Burkitt (No 2) [2019] NSWCA 236 ZG Operations Australia Pty Ltd v Jamsek (2022) 275 CLR 254; [2022] HCA 2 Texts Cited: Abadee, A, et al, Professional Liability in Australia (4th ed, 2023, Lawbook Co) Atkins, Roger J, New South Wales Solicitors Manual (3rd ed, 1975, The Law Society of New South Wales) Butterworths Australian Legal Dictionary (1997, Butterworths) Dal Pont, G E, Law of Agency (4th ed, 2020, LexisNexis) Dal Pont, G E, Lawyers' Professional Responsibility (7th ed, 2021, Lawbook Co) Dal Pont, G E, Solicitors Manual (LexisNexis) Encyclopaedic Australian Legal Dictionary (LexisNexis) Giles, Roger, "Duty of Care, Scope and Breach" (2009) 9 The Judicial Review 165 Halsbury's Laws of Australia Irving, Mark, The Contract of Employment (2nd ed, 2019, LexisNexis Butterworths) Law Council of Australia, "Australian Solicitors' Conduct Rules" https://lawcouncil.au/policy-agenda/regulation-of-the-profession-and-ethics/australian-solicitors-conduct-rules accessed 24 April 2024 Macquarie Dictionary, online ed Ritchie's Uniform Civil Procedure NSW Sappideen, Carolyn et al, Fleming's The Law of Torts (11th ed, 2024, Lawbook Co) Category: Principal judgment Parties: Adelaide Concrete Cutting & Drilling Pty Ltd (First Plaintiff) Giovanni Antonio Parrella (Second Plaintiff) Frank Marino (First Defendant / Second Cross-Defendant) Renaldo Tommaso Polo (Second Defendant / Cross-Claimant) Representation: Counsel: S Baron Levi (First Plaintiff / Second Plaintiff) C Lucarelli (with leave for First Defendant / Second Cross-Defendant - 23-24 October 2023 only) A Jamieson (Second Defendant / Cross-Claimant)